Question

Hull Guard, which used a standard cost accounting system, manufactured 220,000 boat fenders during the year, using 1,590,000 feet of extruded vinyl purchased at $ 1.15 per foot. Production required 4,200 direct labor hours that cost $ 13.50 per hour. The materials standard was 7 feet of vinyl per fender at a standard cost of $ 1.30 per foot. The labor standard was 0.027 direct labor hour per fender at a standard cost of $ 13.00 per hour.

Requirements 1. Compute the price and quantity variances for direct materials. Compute the rate and efficiency variances for direct labor. 2. Does the pattern of variances suggest that Hull Guard’s managers have been making trade- offs? Explain.